Does Business Income insurance respond if a business shuts down because of the coronavirus?  What happens if the authorities require the business to close? There is a short answer to these questions, but it's not necessarily a simple answer.

The short- and long-term impact of the coronavirus is anyone’s guess. Never before has the United States experienced such a significant interruption of business – and of everyday life. There are more questions than answers, each of which has potential implications, especially when it comes to insurance coverage. Many policies spell out limits and exclusions but few anticipated this atypical interruption of everything from supply chains to vacations. Even as this is written, creative claims and lawsuits are emerging.​

I receive calls and emails every day regarding the insurance implications of this virus, and the most common question relates to business income, specifically:

• “Is there business income coverage if a governmental authority (civil authority) requires businesses to close due to the Coronavirus?"  

No, there is generally not business income coverage in this situation. That's the short answer. The longer and more difficult answer is it may all end up being determined by the courts in lawsuits that are most certainly coming, so the truth of the matter is we may not know the answer right now. If coronavrus (COVID-19) causes or results in damage to your business, coverage will depend on the specific facts of the claim and the specific policy’s language. All coverage decisions require an analysis of the claim’s unique facts against the specific terms of the policy, which can only be determined by your insurance carrier.  Therefore, it's difficult to advise whether your business should or should not file a claim (the decision is ultimately yours to make, but it probably can't hurt to try).

Before business income responds there must be damage to property leading to the cessation of a business. This requirement applies to business income dependent property losses (supply chain) and civil authority losses covered by business income policies. Additionally, there is a specific property exclusion applicable to viruses that will generally apply. This is true of “standard" business income forms; there may be some proprietary forms that respond, but these are rare.

If it hasn't already done so, your organization should develop and implement a comprehensive Business Continuity Plan (BCP). A BCP is a very important part of your overall risk management and emergency procedures plan and should be one that includes the necessary steps to take in the event of an epidemic/pandemic.  And, of course, always follow recommended precautions to keep yourself, your employees, and your visitors safe by staying up-to-date on all City, County, State and Federal notices, in addition to recommended travel restrictions and preventive measures.

Above, I have provided a download link for a white-paper that gives a broad overview of how insurance generally responds to the Coronavirus peril.  I highly recommend downloading and reading it - I will update this document as needed.

As always, feel free to reach out to Jon Jepsen at SentryWest Insurance Services if you need help or have additional questions.

As most small business owners know, accepting credit cards is a necessity in today’s competitive and fast-paced environment. Technology makes it easier than ever to accept payments from your customers.

You can even use your cell phone or tablet if your business is mobile. While credit cards can be great for ease, they do pose some cons for business owners when it comes to fees—specifically chargebacks.

Chargebacks were originally designed to protect customers from fraud. Unfortunately, chargebacks are sometimes used for “friendly fraud”. This type of fraud occurs when a customer receives a product or service, but contacts the credit card company to complain that the item was never received or they never made the charge. The credit card company will investigate the complaint and refund the customer if they find in his or her favor. If the complaint is found in favor of the seller, the business will still be charged a fee for the investigation. A January 2016 study found that 80% to 90% of successful chargebacks were resolved in favor of the customer.

Customers sometimes have valid complaints about products and services that do warrant a chargeback situation, but what happens when your business requires appointments to book services and your customer is a no-show? Businesses such as salons, automobile repair shops, and hotels often have to deal with this very issue. Many businesses need to know the number of customers they will serve in a given day for planning and staffing purposes. When a customer doesn’t show up for an appointment, it is the business that has to deal with lost revenue. Many service industries require notice when a customer is not able to make an appointment or reservation. For example, many hotels will charge the equivalent of a one-night stay if the customer doesn’t give a 24-hour cancellation notice. Salons and spas often charge a cancellation fee for the same reason. This practice makes sense for many service-oriented businesses, because without notice you are not able to rebook the time slot or date with another customer.

The problem is that many customers call their credit card companies to dispute these cancellation fees. Here are a few ideas to help you avoid getting stuck in this situation and to fight back against unfair chargebacks:

• Put your cancellation policy in writing. If you allow online bookings, make sure your policy is clearly stated. For those who don’t use online reservations, it is best to have your customer sign a form that outlines your cancellation policy.
• Deal with issues in a timely manner. Contact your customer right away and explain why the cancellation charges are in place and why you will be disputing the chargeback.
• Purchase investigative technology to help you with disputes. Some companies offer businesses an online solution to customer service issues. The online platform may include case management, automated files, and email templates for your business to use. Online platforms can be costly though—around $550 per month.
• Look into a payment service option. One payment service option, known as Square, gives customers free protection for chargebacks up to $250 per month. According to Square, they will notify a business of a chargeback via email by posting to the business’s account dashboard. As an owner, you will have seven days to respond and, if Square determines you have followed their best practices, they will cover the chargeback up to the monthly limit.

Chargebacks can be a frustrating battle—especially when your business is appointment or reservation based. Hopefully with these tips you will be able to cut down on hassles and find a little more peace when dealing with customer credit card disputes.


Sources:
http://www.creditcards.com/credit-card-news/8-merchant-tips-avoid-chargebacks-1455.php
https://www.nerdwallet.com/blog/credit-cards/credit-card-chargebacks/Entrepreneur Magazine, November 2016. Page 20-21

This post was written by Deidre R., a Product Analyst in the Commercial Lines Marketing Department at Acuity. Deidre’s experience also includes nine years as an Account Manager at an insurance agency. She received her bachelor’s degree from St. Norbert College in De Pere, Wisconsin, and her master of organizational behavior from Silver Lake College in Manitowoc, Wisconsin. Her hobbies include volunteering and event planning for a local women’s shelter, yoga, crafting, reading, and biking. She also enjoys spending time with her husband and dog.

It seems that beauty treatments are one of those rare "recession proof" commodities that Americans love. But what happens when that love goes away? Like in 2009, when a 14 year old Florida girl went in to a beauty salon to have her hair dyed blue, and came out with third-degree burns and bald patches. Her parents spent $85,000 in medical expenses and surgical procedures, and turned around and sued the salon for negligence and pain and suffering. It turned out a stylist had not followed the product directions.

While you may have faithful customers and always follow directions, accidents happen all the time. While you focus on your customers and your business, it's important to have the right beauty salon insurance to protect you from financial losses.

Hair Salon Insurance Is Important

• There are more than 86,000 hair salons in the U.S., including 4,000 barber shops.
• Combined hair salon revenue for 2012 was $20 billion.
• The hair salon industry is mostly comprised of small businesses, with the top 50 chains accounting for only 15% of total revenue.
• 80% of hair salons have fewer than five employees.

Most U.S. hair salons are one-shop businesses, or small, local chains. Their small size makes them more vulnerable to financial loss due to fire, storm, break-in or lawsuit.

Salon Insurance for Salon Owners

If you are like the majority of salon owners, your small business is your livelihood. Whether you are just getting started or beginning to expand to new locations, you need the right beauty salon business insurance to keep your investment secure.

Whether you own a hair salon, nail salon, spa, or provide a variety of esthetician services, you will need these three types of beauty salon insurance:

• Salon liability insurance: This provides financial protection if a customer incurs bodily injury or property damage in your place of business and sues. For example, if one of your clients slips and falls at the wash basin, your general liability would pay her medical expenses, plus any judgment or settlement amount you owe, as well as for your legal defense. It's a good idea to set your liability coverage limits as high as you can afford.
• Property and casualty insurance: This covers damage to the building that houses your salon, whether you lease or own it. Casualty insurance covers property you keep inside the walls of your salon, such as computers, counters, chairs, tanning beds, styling equipment, and product. Usually this coverage does not include plate glass walls. If your salon storefront includes a large amount of glass, you may wish to purchase plate glass coverage for a small increase in your premium.
• Workers compensation insurance: If you have employees, you need workers compensation coverage to protect against financial loss from on-the-job injuries and illnesses. This coverage helps the employee by paying medical bills, a portion of lost income, and rehabilitation expenses. It also protects you from lawsuits. Most policies stipulate that by accepting workers compensation payments, the employee agrees not to sue the salon.

Common Salon Insurance Issues

There are several additional considerations for salon owners, depending upon the nature of the salon and the services offered.

• If you hire beauty contractors:
  • The hair stylists, manicurists and massage therapists who rent space in your salon may not be covered by your general liability policy if they cause bodily injury or property damage to one of your clients. Stylists can face lawsuits over something as small as a bad haircut, and these suits can be just as financially destructive as a case in which a client suffers physical harm, such as a chemical burn or an allergic reaction.
  • Consider requiring all of your beauty contractors to carry professional liability insurance. This will provide financial protection for both the contractor and, consequently, the salon, which is helpful if you face litigation over accidents that occur during service.
• If you sell beauty products:
  • If there is a problem with a product you sell, such as a manufacturing flaw or a chemical imbalance in a hair care product, you could be partially liable for any illness or injury your customer suffers. A faulty product suit can affect all parts of the distribution network, from the manufacturer all the way down to the seller.
  • If you carry personal care products on your shelves, such as shampoos, oils, nail lacquers, soaps, massagers, and so on, you can likely benefit from product liability insurance. Product liability provides financial protection for your salon, if one of your products causes injury to your customers. That way you don't have to pay for a manufacturer's mistake.

Nail Salon Insurance

Because of the sharp tools, chemicals, and extended contact necessary for most manicures and pedicures, it is essential to have the right nail salon insurance to protect your business. Some special considerations for nail salon owners include:

• Professional liability insurance: This is especially important for nail salons, because if a worker fails to sanitize tools or accidentally cuts or otherwise injures a customer, your business could be sued. Make sure each employee or contractor carries professional liability coverage so that you are protected from lawsuits due to service mistakes.
• Workers compensation: The effects of breathing nail care chemicals day in and day out can be highly detrimental to your workers' health. Workers compensation is essential to any employer, but even more so to nail salon owners because of the tools of the trade. You can reduce your employees' medical risks by ensuring that they wear protective masks and gear when handling chemicals.

Special Salon Insurance

Depending on the types of services you provide, you may need some or all of the following types of insurance for beauty salons:

• Drain and sewer backups: If you own a hair salon or barber shop, special coverage options may be a good choice, such as drain and sewer backup coverage to pay for the costs of water damage to your walls and floors if your drains become clogged with hair.
• Fire liability: If you own a spa or esthetician services salonan use candles and flammable oils, you probably need fire liability coverage. If you are sued over a fire that starts within the walls of your business, your legal fees and settlement are covered, up to the limits of your policy.
• Equipment breakdown coverage: If your salon is dependent on equipment such as tanning beds, computers and other machines for revenue, equipment breakdown coverage could be a good investment. This coverage ensures that you can get the gadgets you need back online quickly without emptying your bank account.
• Inland marine: Provides financial protection for equipment that is in transit or in storage. If your employees perform esthetician services, hair care, or spa services in outside locations, such as weddings and private homes, inland marine coverage protects you from equipment loss on the go.

Jon Jepsen of SentryWest Insurance Services is a Trusted Choice​© insurance agenct in Salt Lake City, UT. ​
https://www.trustedchoice.com/small-business-insurance/health-beauty/salon/